Blockchain belief

How relevant is blockchain in a supply-chain context? Based on what I’ve heard this year at various international supply chain congresses, opinions and blockchain belief differ. Alexander Bahr, Director Supply Chain Information & Integration at McDonald’s, referred to a statement by research and advisory company Gartner describing blockchain as “a hammer looking for the right nail”. And Willem Vesters, VP Global Supply Chain Planning at Liberty Global, regards the technology as very robust and highly promising, but expensive to use.

According to a recent study by Gartner, just 1% of companies are actively involved with blockchain at the moment. Even so, I’ve already heard of several interesting use cases of blockchain in the supply chain. For example, in a successful six-month pilot in Indonesia, the data from tags on tuna fish was processed in blockchain to facilitate verification of fishing companies’ sustainability claims.

In another case, Walmart, Unilever and Nestlé are exploring the use of blockchain to guarantee food safety. And a further interesting pilot by Maersk and IBM involves avocados from Africa to the Port of Rotterdam. That supply chain currently entails the completion and approval of up to 200 documents, meaning that the administration costs can sometimes end up higher than the value of the goods inside the containers. Blockchain can be an effective solution in such cases, since it not only reduces the administration costs but also considerably shortens the transit time of deliveries.

Dubai as the world’s first blockchain-powered government

Blockchain is not automatically the best solution for tracking and tracing goods; automatic identification linked to a cloud-based platform can work too. But blockchain enables specific actions to be automated in ‘smart contracts’ (pre-programmed rules): when X happens, the next step must be Y. These are not actually legally binding contracts, but rather trust-based agreements between the partners involved in the blockchain.

I am in no doubt that blockchain will become reality. That is my blockchain belief. Dubai has announced its goal of becoming the world’s first blockchain-powered government by 2020, and Amazon Web Services is now also offering services for blockchain technology. So the relevance of blockchain is clear to me, but where and when the technology should be applied depends very much on the supply chain in question.